Covered Bonds

Depfa ACS has bought back its remaining Irish covered bonds. Ireland has now lost a total of three covered bond issuing banks leaving two behind — and they haven’t come to the public market for years.

The volume of retained covered bond issuance used for European Central Bank repo purposes exceeds distributed by many times in several countries. While this repo has provided a welcome boost to bank profits, it has come at the expense of long-term banking sector stability.

Polling for GlobalCapital's Covered Bond Awards 2021 closes at 5:30pm London time on Monday, August 16, so please be sure to cast your firm’s vote if you haven’t already done so. Preliminary data shows that the frontrunners for many awards are in close contention, so every vote stands to make a huge difference.

Pfandbriefbank Schweizerischer Hypothekarinstitute woke up the Swiss franc market on Tuesday by selling the first bond in almost a fortnight.

Private placements are expected to make up the bulk of Swedish covered bond paper throughout the latter half of 2021 and, with the Nordic summer holiday period coming to end, issuance from the region is expected to kick off ahead of the eurozone.

The Bank of Cyprus had its covered bond rating bumped up by Moody’s this week, as the agency considered the recent upgrades to the sovereign and issuer ratings, as well as “positive developments of the Cypriot housing market”.

The recent floods in western and central Europe could have an impact on covered bond pools. However, despite uninsured losses expected to total in the billions, covered borrowers are likely to remain insulated thanks to the diversification of their pools.

Market participants expect the Federal Reserve could address the topic of tapering at its meeting later today; however, the spread of the Delta variant may cause the central bank to put any talk on hold until its Jackson Hole Symposium next month.

Canada’s Equitable Bank covered programme received legislative approval this week, paving the way for a debut deal in the coming months.

Market participants do not expect banks to repay their targeted longer-term refinancing operations (TLTROs) borrowings early when a window opens next month, though the primary market would retain plenty of capacity to swallow up any increased issuance.

S&P has predicted that covered bond ratings will remain steady as European authorities phase out pandemic support, though some cover pools are more at risk than others.

Muenchener Hyp (MuHyp) was the sole representative in the Swiss franc market this week, as it tapped demand for long end paper.